-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LYddDfy04G7Qm9mcZWIzKK/MFmSvfclf7wcamew7sKk+WDa4OYQoDbKFXVOjvUkl iAkovewmo7z8f8F2jxL/Dw== 0000869392-99-000119.txt : 19990309 0000869392-99-000119.hdr.sgml : 19990309 ACCESSION NUMBER: 0000869392-99-000119 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990603 FILED AS OF DATE: 19990308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MASTER INTERMEDIATE INCOME TRUST CENTRAL INDEX KEY: 0000830622 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046584465 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 811-05498 FILM NUMBER: 99559717 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921562 DEF 14A 1 -1- SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. ) ---- Filed by the Registrant / X / ---- ---- Filed by a party other than the Registrant / / ---- CHECK THE APPROPRIATE BOX: ---- / / Preliminary Proxy Statement - ---- ---- / / Confidential, for Use of the Commission Only (as - ---- permitted by Rule 14a-6(e) (2)) ---- / X / Definitive Proxy Statement - ---- ---- / / Definitive Additional Materials - ---- ---- / / Soliciting Material Pursuant to Sec. 240.14a-11(c) or - ---- Sec. 240.14a-12 PUTNAM MASTER INTERMEDIATE INCOME TRUST (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than Registrant) PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX): ---- / X / No fee required - ---- ---- / / Fee computed on table below per Exchange Act Rule 14a - ---- 6(i)(1) and 0-11 (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: ---- / / Fee paid previously with preliminary materials. - ---- ---- / / Check box if any part of the fee is offset as provided - ---- by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: IMPORTANT INFORMATION FOR SHAREHOLDERS IN PUTNAM MASTER INTERMEDIATE INCOME TRUST THE DOCUMENT YOU HOLD IN YOUR HANDS CONTAINS YOUR PROXY STATEMENT AND PROXY CARD. A PROXY CARD IS, IN ESSENCE, A BALLOT. WHEN YOU VOTE YOUR PROXY, IT TELLS US HOW TO VOTE ON YOUR BEHALF ON IMPORTANT ISSUES RELATING TO YOUR FUND. IF YOU COMPLETE AND SIGN THE PROXY, WE'LL VOTE IT EXACTLY AS YOU TELL US. IF YOU SIMPLY SIGN THE PROXY, WE'LL VOTE IT IN ACCORDANCE WITH THE TRUSTEES' RECOMMENDATIONS ON PAGES 5 AND 6 . WE URGE YOU TO SPEND A COUPLE OF MINUTES WITH THE PROXY STATEMENT, FILL OUT YOUR PROXY CARD, AND RETURN IT TO US. WHEN SHAREHOLDERS DON'T RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, WE HAVE TO INCUR THE EXPENSE OF FOLLOW-UP SOLICITATIONS, WHICH CAN COST YOUR FUND MONEY. WE WANT TO KNOW HOW YOU WOULD LIKE TO VOTE AND WELCOME YOUR COMMENTS. PLEASE TAKE A FEW MOMENTS WITH THESE MATERIALS AND RETURN YOUR PROXY TO US. (PUTNAM LOGO APPEARS HERE) BOSTON * LONDON * TOKYO TABLE OF CONTENTS A Message from the Chairman 1 Notice of Shareholder Meeting 2 Trustees' Recommendations 5 PROXY CARD ENCLOSED If you have any questions, please contact us at the special toll- free number we have set up for you (1-800-225-1581) or call your financial adviser. A MESSAGE FROM THE CHAIRMAN (Photograph of George Putnam appears here) Dear Shareholder: I am writing to you to ask for your vote on important questions that affect your investment in your fund. While you are, of course, welcome to join us at your fund's meeting, most shareholders cast their vote by filling out and signing the enclosed proxy. We are asking for your vote on the following matters: (1) fixing the number of Trustees and electing your fund's Trustees; (2) ratifying the selection of your fund's independent auditors; (3) approving amendments to certain of your fund's fundamental investment restrictions; and (4) approving the elimination of certain of your fund's fundamental investment restrictions. Although we would like very much to have each shareholder attend his or her fund's meeting, we realize this is not possible. Whether or not you plan to be present, we need your vote. We urge you to complete, sign, and return the enclosed proxy card promptly. A postage-paid envelope is enclosed. I'm sure that you, like most people, lead a busy life and are tempted to put this proxy aside for another day. Please don't. When shareholders do not return their proxies, their fund may have to incur the expense of follow-up solicitations. All shareholders benefit from the speedy return of proxies. Your vote is important to us. We appreciate the time and consideration that I am sure you will give this important matter. If you have questions about the proposals, contact your financial adviser or call a Putnam customer service representative at 1-800- 225-1581. Sincerely yours, (signature of George Putnam) George Putnam, Chairman PUTNAM MASTER INTERMEDIATE INCOME TRUST NOTICE OF ANNUAL MEETING OF SHAREHOLDERS THIS IS THE FORMAL AGENDA FOR YOUR FUND'S SHAREHOLDER MEETING. IT TELLS YOU WHAT MATTERS WILL BE VOTED ON AND THE TIME AND PLACE OF THE MEETING, IF YOU CAN ATTEND IN PERSON. To the Shareholders of Putnam Master Intermediate Income Trust: The Annual Meeting of Shareholders of your fund will be held on June 3, 1999 at 2:00 p.m., Boston time, on the eighth floor of One Post Office Square, Boston, Massachusetts, to consider the following: 1. FIXING THE NUMBER OF TRUSTEES AND ELECTING TRUSTEES. SEE PAGE 8 . 2. RATIFYING THE SELECTION BY THE TRUSTEES OF THE INDEPENDENT AUDITORS OF YOUR FUND FOR ITS CURRENT FISCAL YEAR. SEE PAGE 24 . 3.A. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO DIVERSIFICATION. SEE PAGE 25 . 3.B. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN THE VOTING SECURITIES OF A SINGLE ISSUER. SEE PAGE 26 . 3.C. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO MAKING LOANS. SEE PAGE 28 . 3.D. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN COMMODITIES. SEE PAGE 29 . 3.E. APPROVING AN AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN REAL ESTATE. SEE PAGE 31 . 4.A. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN WHICH MANAGEMENT OF THE FUND OR PUTNAM INVESTMENT MANAGEMENT, INC. OWNS SECURITIES. SEE PAGE 32 . 4.B. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO MARGIN TRANSACTIONS. SEE PAGE 33 . 4.C. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO SHORT SALES. SEE PAGE 34 . 4.D. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO PLEDGING ASSETS. SEE PAGE 36 . 4.E. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN RESTRICTED SECURITIES. SEE PAGE 37 . 4.F. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN OIL, GAS AND MINERAL INTERESTS. SEE PAGE 38 . 4.G. APPROVING THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTING TO GAIN CONTROL OF A COMPANY'S MANAGEMENT. SEE PAGE 39 . 5. TRANSACTING OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. By the Trustees George Putnam, Chairman John A. Hill, Vice Chairman William F. Pounds, Vice Chairman Jameson A. Baxter Robert E. Patterson Hans H. Estin Donald S. Perkins Ronald J. Jackson George Putnam, III Paul L. Joskow A.J.C. Smith Elizabeth T. Kennan W. Thomas Stephens Lawrence J. Lasser W. Nicholas Thorndike John H. Mullin, III WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT THE MEETING. March 5 , 1999 PROXY STATEMENT THIS DOCUMENT WILL GIVE YOU THE INFORMATION YOU NEED TO VOTE ON THE MATTERS LISTED ON THE PREVIOUS PAGES. MUCH OF THE INFORMATION IN THE PROXY STATEMENT IS REQUIRED UNDER RULES OF THE SECURITIES AND EXCHANGE COMMISSION ("SEC"); SOME OF IT IS TECHNICAL. IF THERE IS ANYTHING YOU DON'T UNDERSTAND, PLEASE CONTACT US AT OUR SPECIAL TOLL-FREE NUMBER, 1-800-225-1581, OR CALL YOUR FINANCIAL ADVISER. WHO IS ASKING FOR MY VOTE? THE ENCLOSED PROXY IS SOLICITED BY THE TRUSTEES OF PUTNAM MASTER INTERMEDIATE INCOME TRUST for use at the Annual Meeting of Shareholders of the fund to be held on June 3, 1999, and, if your fund's meeting is adjourned, at any later meetings, for the purposes stated in the Notice of Annual Meeting (see previous pages). HOW DO YOUR FUND'S TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE ON THESE PROPOSALS? The Trustees recommend that you vote 1. FOR FIXING THE NUMBER OF TRUSTEES AS PROPOSED AND THE ELECTION OF ALL NOMINEES; 2. FOR RATIFYING THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT AUDITORS OF YOUR FUND; 3.A. FOR AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO DIVERSIFICATION; 3.B. FOR AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN THE VOTING SECURITIES OF A SINGLE ISSUER; 3.C. FOR AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO MAKING LOANS; 3.D. FOR AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN COMMODITIES; 3.E. FOR AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN REAL ESTATE; 4.A. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN WHICH MANAGEMENT OF THE FUND OR PUTNAM INVESTMENT MANAGEMENT, INC. OWNS SECURITIES; 4.B. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO MARGIN TRANSACTIONS; 4.C. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO SHORT SALES; 4.D. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO PLEDGING ASSETS; 4.E. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN RESTRICTED SECURITIES; 4.F. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN OIL, GAS AND MINERAL INTERESTS; AND 4.G. FOR ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTING TO GAIN CONTROL OF A COMPANY'S MANAGEMENT. WHO IS ELIGIBLE TO VOTE? Shareholders of record at the close of business on March 5, 1999 are entitled to be present and to vote at the meeting or any adjourned meeting. The Notice of Annual Meeting, the proxy, and the Proxy Statement are being mailed to shareholders of record on or about March 12 , 1999. Each share is entitled to one vote. Shares represented by duly executed proxies will be voted in accordance with shareholders' instructions. If you sign the proxy, but don't fill in a vote, your shares will be voted in accordance with the Trustees' recommendations. If any other business is brought before the meeting, your shares will be voted at the Trustees' discretion. THE PROPOSALS I. ELECTION OF TRUSTEES WHO ARE THE NOMINEES FOR TRUSTEES? The Board Policy Committee of the Trustees recommends that the number of Trustees be fixed at fifteen and that you vote for the election of the nominees described below. Each nominee is currently a Trustee of your fund and of the other Putnam funds. The Board Policy Committee of the Trustees of your fund consists solely of Trustees who are not "interested persons" (as defined in the Investment Company Act of 1940) of your fund or of Putnam Investment Management, Inc., your fund's investment manager ("Putnam Management"). JAMESON ADKINS BAXTER [INSERT PICTURE] Ms. Baxter, age 55, is the President of Baxter Associates, Inc., a management consulting and private investment firm which she founded in 1986. During that time, she was also a Vice President and Principal of the Regency Group, Inc., and a Consultant to First Boston Corporation, both of which are investment banking firms. From 1965 to 1986, Ms. Baxter held various positions in investment banking and corporate finance at First Boston. Ms. Baxter currently also serves as a Director of Banta Corporation, Avondale Financial Corp., and ASHTA Chemicals, Inc. She is also the Chairman Emeritus of the Board of Trustees of Mount Holyoke College, having previously served as Chairman for five years and as a Board member for thirteen years; an Honorary Trustee and past President of the Board of Trustees of the Emma Willard School; Chair of the Board of Governors of Good Shepherd Hospital; and Vice Chair of the National Center for Nonprofit Boards. Ms. Baxter is a graduate of Mount Holyoke College. HANS H. ESTIN [INSERT PICTURE] Mr. Estin, age 70, is a Chartered Financial Analyst and the Vice Chairman of North American Management Corp., a registered investment adviser serving individual clients and their families. Mr. Estin currently also serves as a Corporation Member of The Schepens Eye Research Institute; and a Trustee of New England Aquarium. He previously served as the Chairman of the Board of Trustees of Boston University and is currently active in various other civic associations, including the Boys & Girls Clubs of Boston, Inc. Mr. Estin is a graduate of Harvard College and holds honorary doctorates from Merrimack College and Boston University. JOHN A. HILL [INSERT PICTURE] Mr. Hill, age 57, is Vice Chairman of the Trustees . He is the Chairman and Managing Director of First Reserve Corporation, a registered investment adviser investing in companies in the world-wide energy industry on behalf of institutional investors. Prior to acquiring First Reserve in 1983, Mr. Hill held executive positions with several investment advisory firms and held various positions with the Federal government, including Associate Director of the Office of Management and Budget and Deputy Administrator of the Federal Energy Administration. Mr. Hill currently also serves as a Director of Snyder Oil Corporation, an exploration and production company which he founded, TransMontaingne Oil Company, a refined oil product pipeline and distribution company and various private companies controlled by First Reserve Corporation. He is also a Member of the Board of Advisors of Fund Directions. He is currently active in various business associations, including the Economic Club of New York, and lectures on energy issues in the United States and Europe. Mr. Hill is a graduate of Southern Methodist University. RONALD J. JACKSON [INSERT PICTURE] Mr. Jackson, age 55, retired as Chairman of the Board, President and Chief Executive Officer of Fisher-Price, Inc., a major toy manufacturer, in 1993, a position which he held since 1990 . He previously served as President and Chief Executive Officer of Stride-Rite, Inc., a manufacturer and distributor of footwear, from 1989 to 1990, and as President and Chief Executive Officer of Kenner Parker Toys, Inc., a major toy and game manufacturer, from 1985 to 1987. Prior to that, he held various financial and marketing positions at General Mills, Inc. from 1966 to 1985, including Vice President, Controller and Vice President of Marketing for Parker Brothers, a toy and game company, and President of Talbots, a retailer and direct marketer of women's apparel. Mr. Jackson is a graduate of Michigan State University Business School. PAUL L. JOSKOW* [INSERT PICTURE] Dr. Joskow, age 51, is Elizabeth and James Killian Professor of Economics and former Chairman of the Department of Economics at the Massachusetts Institute of Technology. He has published three books and numerous articles on topics in industrial organization, government regulation of industry, and competition policy. Dr. Joskow currently serves as a Director of the New England Electric System, a public utility holding company, State Farm Indemnity Company, an automobile insurance company, and the Whitehead Institute for Biomedical Research, a non-profit research institution. He has been President of the Yale University Council since 1993. Dr. Joskow is active on industry restructuring, environmental, energy, competition, and privatization policies and has served as an advisor to governments and corporations around the world. Dr. Joskow is a graduate of Cornell University and Yale University. He is a Fellow of the Econometric Society and the American Academy of Arts and Sciences. ELIZABETH T. KENNAN [INSERT PICTURE] Dr. Kennan, age 61, is President Emeritus of Mount Holyoke College. From 1978 through June 1995, she was President of Mount Holyoke College. From 1966 to 1978, she was on the faculty of Catholic University, where she taught history, published numerous articles, and directed the postdoctoral programs in Patristic and Medieval Studies. Dr. Kennan currently also serves as a Director of Bell Atlantic, Northeast Utilities, the Kentucky Home Life Insurance Companies, and Talbots. She also serves as a Member of The Folger Shakespeare Library Committee. She is currently active in various educational and civic associations. Dr. Kennan is a graduate of Mount Holyoke College, the University of Washington, and St. Hilda's College, Oxford University, and holds several honorary doctorates. LAWRENCE J. LASSER* [INSERT PICTURE] Mr. Lasser, age 56, is the Vice President of your fund and each of the other Putnam funds. He has been the President, Chief Executive Officer and a Director of Putnam Investments, Inc. and Putnam Management since 1985, having begun his career there in 1969. Mr. Lasser currently also serves as a Director of Marsh & McLennan Companies, Inc., the parent company of Putnam Management, and the United Way of Massachusetts Bay. He is a Member of the Board of Trustees of the Museum of Fine Arts in Boston, The Council on Foreign Relations, and a Member of the Board of Governors and Executive Committee at the Investment Company Institute. He is also a Trustee of the Beth Israel\Deaconess Medical Center in Boston and the Vineyard Open Land Foundation. Mr. Lasser is a graduate of Antioch College and Harvard Business School. JOHN H. MULLIN, III [INSERT PICTURE] Mr. Mullin, age 57, is Chairman and CEO of Ridgeway Farm, a limited liability company engaged in timber activities and farming. Prior to establishing Ridgeway Farm, Mr. Mullin was a Managing Director of Dillon, Read & Co. Inc., an investment banking firm. Mr. Mullin currently serves as a Director of ACX Technologies, Inc., a company engaged in the manufacture of industrial ceramics and packaging products; Alex. Brown Realty, Inc., a real estate investment company and The Liberty Corporation, a company engaged in the life insurance and broadcasting industries. Mr. Mullin previously served as a Director of Dillon, Read & Co. Inc., Adolph Coors Company, Crystal Brands, Inc., Fisher-Price, Inc., Mattel, Inc. and The Ryland Group, Inc. Mr. Mullin is a Trustee Emeritus of Washington & Lee University where he served as Chairman of the Investment Committee. Mr. Mullin is a graduate of Washington & Lee University and The Wharton Graduate School at the University of Pennsylvania. ROBERT E. PATTERSON [INSERT PICTURE] Mr. Patterson, age 52, is the President and a Trustee of Cabot Industrial Trust, a publicly traded real estate investment trust. Prior to February, 1998 he was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership, a registered investment adviser which managed real estate investments for institutional investors. Prior to 1990, he was the Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc., the predecessor company of Cabot Partners. Prior to that, he was a Senior Vice President of the Beal Companies, a real estate management, investment and development company. He has also worked as an attorney and held various positions in state government, including the founding Executive Director of the Massachusetts Industrial Finance Agency. Mr. Patterson currently also serves as Chairman of the Joslin Diabetes Center, a Trustee of SEA Education Association and a Director of Brandywine Trust Company. Mr. Patterson is a graduate of Harvard College and Harvard Law School. WILLIAM F. POUNDS [INSERT PICTURE] Dr. Pounds, age 70, is the Vice Chairman of the Trustees . He was a Professor of Management at the Massachusetts Institute of Technology Alfred P. Sloan School of Management from 1961 through 1998, and is currently a Professor Emeritus. Dr. Pounds currently also serves as a Director of IDEXX Laboratories, Inc., North American Management Corp., Management Sciences For Health, Inc. and Sun Company, Inc. He is also a Vice President and Trustee of the Museum of Fine Arts, Boston; and a Fellow of The American Academy of Arts and Sciences. He previously served as Senior Advisor to the Rockefeller Family and as President and Chief Executive Officer of Rockefeller Financial Services, Inc. and as a Director of Fisher-Price, Inc., General Mills, Inc., and an Overseer of WGBH Educational Foundation. Dr. Pounds is a graduate of Carnegie-Mellon University. GEORGE PUTNAM* [INSERT PICTURE] Mr. Putnam, age 72, is the Chairman of the Trustees and President of your fund and each of the other Putnam funds. He is the Chairman and a Director of Putnam Management and Putnam Mutual Funds Corp. and a Director of Marsh & McLennan Companies, Inc., their parent company. Mr. Putnam is the son of the founder of the Putnam funds and Putnam Management and has been employed in various capacities by Putnam Management since 1951, including Chief Executive Officer from 1961 to 1973. He is a former Overseer and Treasurer of Harvard University; a past Chairman of the Harvard Management Company; and a Trustee Emeritus of Wellesley College and Bradford College. Mr. Putnam currently also serves as a Director of Freeport Copper and Gold, Inc., a mining and natural resources company and Houghton Mifflin Company, a major publishing company. He is also a Trustee of Massachusetts General Hospital, McLean Hospital, Vincent Memorial Hospital, WGBH Educational Foundation, the Museum of Fine Arts, Boston, the New England Aquarium and College of the Atlantic; an Overseer of the Museum of Science in Boston, and Northeastern University; and a Fellow of The American Academy of Arts and Sciences. Mr. Putnam is a graduate of Harvard College and Harvard Business School and holds honorary doctorates from Bates College and Harvard University. GEORGE PUTNAM, III* [INSERT PICTURE] Mr. Putnam, age 47, is the President of New Generation Research, Inc., a publisher of financial advisory and other research services relating to bankrupt and distressed companies, and New Generation Advisers, Inc., a registered investment adviser which provides advice to private funds specializing in investments in such companies. Prior to founding New Generation in 1985, Mr. Putnam was an attorney with the Philadelphia law firm Dechert Price & Rhoads. Mr. Putnam currently also serves as a Director of the Massachusetts Audubon Society and The Boston Family Office, L.L.C., a registered investment advisor that provides financial advice to individuals and families. He is also a Trustee of the SEA Education Association and St. Mark's School. Mr. Putnam is a graduate of Harvard College, Harvard Business School and Harvard Law School. A.J.C. SMITH* [INSERT PICTURE] Mr. Smith, age 64, is the Chairman and Chief Executive Officer of Marsh & McLennan Companies, Inc. He has been employed by Marsh & McLennan and related companies in various capacities since 1961. Mr. Smith is a Director of the Trident Corp.; a Trustee of the Carnegie Hall Society, the Central Park Conservancy, the Educational Broadcasting Corporation, the Economic Club of New York, and the U.S. Chamber of Commerce; a Member of the Board of Overseers of the Joan and Sanford I. Weill Graduate School of Medical Sciences of Cornell University; and a Founder of the Museum of Scotland Society. He was educated in Scotland and is a Fellow of the Faculty of Actuaries in Edinburgh, a Fellow of the Canadian Institute of Actuaries, a Fellow of the Conference of Actuaries, an Associate of the Society of Actuaries, a Member of the American Academy of Actuaries, the International Actuarial Association and the International Association of Consulting Actuaries. W. THOMAS STEPHENS [INSERT PICTURE] Mr. Stephens, age 56, is the President and Chief Executive Officer of MacMillan Bloedel Limited, a forest products and building materials company. In 1996, Mr. Stephens retired as Chairman of the Board of Directors, President and Chief Executive Officer of Johns Manville Corporation . He also served as Executive Vice President and Chief Financial Officer of Manville. In total, Mr. Stephens had 27 years of experience with Manville and its predecessor companies. Mr. Stephens serves as a Director for Qwest Communications, a fiber optic and communication system supplier and New Century Energies, a public utility company. Mr. Stephens is a graduate of the University of Arkansas. W. NICHOLAS THORNDIKE** [INSERT PICTURE] Mr. Thorndike, age 65, serves as a Director of various corporations and charitable organizations, including Data General Corporation, a computer and high technology company, Bradley Real Estate, Inc., a real estate investment firm, Providence Journal Co., a newspaper publisher, and Courier Corporation, a book binding and printing company. He is also a Trustee of Cabot Industrial Trust, Eastern Utilities Associates, Massachusetts General Hospital, where he previously served as chairman and president, and Northeastern University. Prior to December 1988, he was the Chairman of the Board and Managing Partner of Wellington Management Company/Thorndike, Doran, Paine & Lewis, a registered investment adviser that manages mutual funds and institutional assets. He also previously served as a Trustee of the Wellington Group of Funds (now The Vanguard Group) and was the Chairman and a Director of Ivest Fund, Inc. Mr. Thorndike is a graduate of Harvard College. - ---------------------------- * Nominees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of your fund, Putnam Management, and Putnam Mutual Funds Corp. ("Putnam Mutual Funds"), the principal underwriter for all the open-end Putnam funds and an affiliate of Putnam Management. Messrs. Putnam, Lasser, and Smith are deemed "interested persons" by virtue of their positions as officers or shareholders of your fund, or directors of Putnam Management, Putnam Mutual Funds, or Marsh & McLennan Companies, Inc., the parent company of Putnam Management and Putnam Mutual Funds. Mr. George Putnam, III, Mr. Putnam's son, is also an "interested person" of your fund, Putnam Management, and Putnam Mutual Funds. Mr. Joskow is not currently an "interested person" of your fund but could be deemed by the Securities and Exchange Commission to be an "interested person" on account of his prior consulting relationship with National Economic Research Associates, Inc. a wholly-owned subsidiary of Marsh & McLennan Companies, Inc., which was terminated as of August 31, 1998. The balance of the nominees are not "interested persons." ** In February 1994 Mr. Thorndike accepted appointment as a successor trustee of certain private trusts in which he has no beneficial interest. At that time he also became Chairman of the Board of two privately owned corporations controlled by such trusts, serving in that capacity until October 1994. These corporations filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in August 1994. Except as indicated above, the principal occupations and business experience of the nominees for the last five years have been with the employers indicated, although in some cases they have held different positions with those employers. All the nominees were elected by the shareholders in December 1997. The 15 nominees for election as Trustees at the shareholder meeting of your fund who receive the greatest number of votes will be elected Trustees of your fund. The Trustees serve until their successors are elected and qualified. Each of the nominees has agreed to serve as a Trustee if elected. If any of the nominees is unavailable for election at the time of the meeting, which is not anticipated, the Trustees may vote for other nominees at their discretion, or the Trustees may fix the number of Trustees at less than 15 for your fund. WHAT ARE THE TRUSTEES' RESPONSIBILITIES? Your fund's Trustees are responsible for the general oversight of your fund's business and for assuring that your fund is managed in the best interests of its shareholders. The Trustees periodically review your fund's investment performance as well as the quality of other services provided to your fund and its shareholders by Putnam Management and its affiliates, including administration, custody and investor servicing. At least annually, the Trustees review the fees paid to Putnam Management and its affiliates for these services and the overall level of your fund's operating expenses. In carrying out these responsibilities, the Trustees are assisted by an independent administrative staff and by your fund's auditors and legal counsel, which are selected by the Trustees and are independent of Putnam Management and its affiliates. DO THE TRUSTEES HAVE A STAKE IN YOUR FUND? The Trustees believe it is important that each Trustee have a significant investment in the Putnam funds. The Trustees allocate their investments among the more than 113 Putnam funds based on their own investment needs. The Trustees' aggregate investments in the Putnam funds total over $75 million. The table below lists each Trustee's current investments in the fund and in the Putnam funds as a group based on beneficial ownership. Except as otherwise noted, each Trustee has sole voting power and sole investment power with respect to his or her shares. SHARE OWNERSHIP BY TRUSTEES YEAR FIRST NUMBER OF ELECTED AS NUMBER OF SHARES OF TRUSTEE OF SHARES OF THE ALL PUTNAM THE PUTNAM FUND OWNED FUNDS OWNED TRUSTEES FUNDS AS OF 1/31/99 AS OF 1/31/99 (1) - -------------------------------------------------------------------------------- Jameson A. Baxter 1994 257 122,336 Hans H. Estin 1972 1,47534,494 John A. Hill 1985 196 187,531 Ronald J. Jackson 1996 391(2) 147,449 Paul L. Joskow 1997 10022,959 Elizabeth T. Kennan 1992 279(3)25,719 Lawrence J. Lasser 1992 196 509,341 John H. Mullin, III 1997 10039,388 Robert E. Patterson 1984 58770,671 Donald S. Perkins 1982 2,020 186,910 William F. Pounds 1971 979 337,409 George Putnam 1957 3,7061,965,898 George Putnam, III 1984 978521,258 A.J.C. Smith 1986 391(4)61,089 W. Thomas Stephens 1997 100 125,050 W. Nicholas Thorndike 1992 35181,178 - -------------------------------------------------------------------------------- (1) These holdings do not include shares of Putnam money market funds (2) Mr. Jackson has shared investment power and shared voting power with respect to such shares. (3) Dr . Kennan is the custodian of a trust which owns all of these shares and in which she has no economic interest. (4) Mr. Smith has shared investment power and shared voting power with respect to such shares. As of January 31, 1999, the Trustees and officers of the fund owned a total of 12,106 shares of the fund, comprising less than 1% of the outstanding shares of the fund on that date. WHAT ARE SOME OF THE WAYS IN WHICH THE TRUSTEES REPRESENT SHAREHOLDER INTERESTS? The Trustees believe that, as substantial investors in the Putnam funds, their interests are closely aligned with those of individual shareholders. Among other ways, the Trustees seek to represent shareholder interests: * by carefully reviewing your fund's investment performance on an individual basis with your fund's managers; * by also carefully reviewing the quality of the various other services provided to the funds and their shareholders by Putnam Management and its affiliates; * by discussing with senior management of Putnam Management steps being taken to address any performance deficiencies; * by reviewing the fees paid to Putnam Management to ensure that such fees remain reasonable and competitive with those of other mutual funds, while at the same time providing Putnam Management sufficient resources to continue to provide high quality services in the future; * by monitoring potential conflicts between the funds and Putnam Management and its affiliates to ensure that the funds continue to be managed in the best interests of their shareholders; and * by monitoring potential conflicts among funds to ensure that shareholders continue to realize the benefits of participation in a large and diverse family of funds. HOW OFTEN DO THE TRUSTEES MEET? The Trustees meet each month (except August) over a two-day period to review the operations of your fund and of the other Putnam funds. A portion of these meetings is devoted to meetings of various Committees of the board which focus on particular matters. These currently include: the Contract Committee, which reviews all contractual arrangements with Putnam Management and its affiliates ; the Communication, Service and Marketing Committee, which reviews the quality of services provided by your fund's investor servicing agent and distributor ; the Brokerage and Custody Committee, which reviews matters relating to custody of securities, best execution, brokerage costs and allocations and new investment techniques; the Audit and Pricing Committee, which reviews procedures for the valuation of securities, the funds ' accounting policies and the adequacy of internal controls and supervises the engagement of the funds' auditors; the Board Policy Committee, which reviews the compensation of the Trustees and their administrative staff and supervises the engagement of the funds' independent counsel and which is responsible for selecting nominees for election as Trustees , and the Closed-end Funds and Variable Trust Committee, which is responsible for reviewing special issues applicable to closed-end funds such as your fund and funds sold through variable annuity products . Each Trustee generally attends at least two formal committee meetings during each regular meeting of the Trustees. During 1998, the average Trustee participated in approximately 40 committee and board meetings. In addition, the Trustees meet in small groups with Chief Investment Officers and Portfolio Managers to review recent performance and the current investment climate for selected funds. These meetings ensure that each fund's performance is reviewed in detail at least twice a year. The Contract Committee typically meets on several additional occasions during the year to carry out its responsibilities. Other Committees, including an Executive Committee, may also meet on special occasions as the need arises. WHAT ARE THE TRUSTEES PAID FOR THEIR SERVICES? Each Trustee receives a fee for his or her services. Each Trustee also receives fees for serving as Trustee of the other Putnam funds. The Trustees periodically review their fees to assure that such fees continue to be appropriate in light of their responsibilities as well as in relation to fees paid to trustees of other mutual fund complexes. The Compensation Committee, which consists solely of Trustees not affiliated with Putnam Management, estimates that Committee and Trustee meeting time together with the appropriate preparation requires the equivalent of at least three business days per Trustee meeting. The following table shows the fees paid to each Trustee by the fund for its most recent fiscal year and the fees paid to each Trustee by all of the Putnam funds during calendar year 1998:
COMPENSATION TABLE PENSION OR ESTIMATED TOTAL AGGREGATE RETIREMENT ANNUAL BENEFITS COMPENSATION COMPENSATION BENEFITS ACCRUED FROM ALL FROM ALL FROM THE AS PART OF PUTNAM FUNDS PUTNAM TRUSTEES FUND(1) FUND EXPENSES UPON RETIREMENT(2) FUNDS(3) - ------------------------------------------------------------------------------------- Jameson A. Baxter $1,394 $376 $ 95,000 $207,000(4) Hans H. Estin 1,258 742 95,000 182,500 John A. Hill(4)(5) 1,246 278 115,000 200,500 Ronald J. Jackson(4) 1,358 197 95,000 200,500 Paul L. Joskow (4) 1,117 26 95,000 180,500 Elizabeth T. Kennan 1,358 401 95,000 200,500 Lawrence J. Lasser 1,232 299 95,000 178,500 John H. Mullin, III(4) 1,117 39 95,000 180,500 Robert E. Patterson 1,252 223 95,000 181,500 Donald S. Perkins 1,258 803 95,000 182,500 William F. Pounds (5) 1,372 835 115,000 215,000 George Putnam 1,241 849 95,000 179,500 George Putnam, III 1,252 147 95,000 181,500 A.J.C. Smith 1,225 500 95,000 176,500 W. Thomas Stephens(4) 1,191 37 95,000 181,500 W. Nicholas Thorndike 1,258 574 95,000 182,500 (1) Includes an annual retainer and an attendance fee for each meeting attended. (2) Assumes that each Trustee retires at the normal retirement date. Estimated benefits for each Trustee are based on Trustee fee rates in effect during calendar 1998. (3) As of December 31, 1998, there were 113 funds in the Putnam family. (4) Includes compensation deferred pursuant to a Trustee Compensation Deferral Plan. The total amounts of deferred compensation payable by the fund to Mr. Hill, Mr. Jackson, Mr. Joskow, Mr. Mullin, and Mr. Stephens as of September 30, 1998 was $4,721, $2,530, $632, $629 and $775, respectively, including income earned on such amounts. (5) Includes additional compensation for service as Vice Chairman of the Putnam funds.
Under a Retirement Plan for Trustees of the Putnam funds (the "Plan"), each Trustee who retires with at least five years of service as a Trustee of the funds is entitled to receive an annual retirement benefit equal to one-half of the average annual compensation paid to such Trustee for the last three years of service prior to retirement. This retirement benefit is payable during a Trustee's lifetime, beginning the year following retirement, for a number of years equal to such Trustee's years of service. A death benefit is also available under the Plan which assures that the Trustee and his or her beneficiaries will receive benefit payments for the lesser of an aggregate period of (i) ten years or (ii) such Trustee's total years of service. The Plan Administrator (a committee comprised of Trustees that are not "interested persons" of the fund, as defined in the Investment Company Act of 1940) may terminate or amend the Plan at any time, but no termination or amendment will result in a reduction in the amount of benefits (i) currently being paid to a Trustee at the time of such termination or amendment, or (ii) to which a current Trustee would have been entitled to receive had he or she retired immediately prior to such termination or amendment. For additional information about your fund, including further information about its Trustees and officers, please see "Fund Information," on page 44 . PUTNAM INVESTMENTS Putnam Investment Management, Inc. and its affiliate, Putnam Fiduciary Trust Company, your fund's investor servicing agent and custodian, are owned by Putnam Investments, Inc., One Post Office Square, Boston, Massachusetts 02109, a holding company that is, except for a minority stake owned by employees, in turn owned by Marsh & McLennan Companies, Inc., which has executive offices at 1166 Avenue of the Americas, New York, New York 10036. Marsh & McLennan Companies, Inc. is a leading professional services firm with risk and insurance services, investment management and consulting businesses. 2. RATIFICATION OF INDEPENDENT AUDITORS PRICEWATERHOUSECOOPERS LLP , 160 Federal Street, Boston, Massachusetts 02110, independent accountants, has been selected by the Trustees as the independent auditors of your fund for the current fiscal year. Among the country's preeminent accounting firms, this firm also serves as the auditor for the other funds in the Putnam family. It was selected primarily on the basis of its expertise as auditors of investment companies, the quality of its audit services, and the competitiveness of its fees. A majority of the votes on the matter is necessary to ratify the selection of auditors. A representative of the independent auditors is expected to be present at the meeting to make statements and to respond to appropriate questions. Effective July 1, 1998, Coopers & Lybrand L.L.P. and Price Waterhouse LLP combined their businesses and practices and began doing business as PricewaterhouseCoopers LLP. PROPOSALS 3 AND 4 As described in the following proposals, the Trustees are recommending that shareholders approve a number of changes to your fund's fundamental investment restrictions, including the elimination of certain restrictions. The purpose of these proposed changes is to standardize the investment restrictions of all of the Putnam funds, including your fund where appropriate, and in certain cases to increase the fund's investment flexibility. By having standard investment restrictions for all Putnam funds, Putnam Management will be able to more easily monitor each fund's compliance with its investment policies. Many of these changes will have little practical effect on the way the fund is managed given the fund's current investment objective and policies. The adoption of any of these proposals is not contingent on the adoption of any other proposal. 3.A. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO DIVERSIFICATION The Trustees are recommending that the fund's fundamental investment restriction with respect to the diversification of its investments be revised to reflect the standard restriction used by other Putnam funds and to grant the fund the maximum investment flexibility permitted by the Investment Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, the fund, as a diversified fund, generally may not, with respect to 75% of its total assets, invest more than 5% of its total assets in the securities of any one issuer (except U.S. government securities). The remaining 25% of the fund's total assets is not subject to this restriction. The fund's current restriction is more restrictive, and states that the fund may not: "Invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of the Fund (taken at current value) would be invested in the securities of such issuer; provided that this limitation does not apply to securities of the U.S. Government or its agencies or instrumentalities or, with respect to 25% of the Fund's total assets, to securities issued by, or backed by the credit of, any foreign government, its agencies and instrumentalities." The proposed amended fundamental investment restriction is set forth below. "The fund may not ... With respect to 75% of its total assets, invest in the securities of any issuer if, immediately after such investment, more than 5% of the total assets of the fund (taken at current value) would be invested in the securities of such issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities." If the proposal is approved, the fund will be able to invest up to 25% of its total assets in the securities of any one issuer , including securities issued by, or backed by the credit of, any foreign government or its agencies or instrumentalities, to the extent consistent with the Investment Company Act of 1940 (the "1940 Act") . The amended restriction would continue to exclude from its limitations U.S. government securities, and would clarify, consistent with the definitions under the Code and the 1940 Act , that U.S. government securities include obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities. Putnam Management believes that this enhanced investment flexibility could assist the fund in achieving its investment objective. However, during times when Putnam Management invests a higher percentage of the fund's assets in one or more issuers, the value of the fund's shares may fluctuate more widely than the value of shares of a portfolio investing in a larger number of issuers. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 3.B. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN THE VOTING SECURITIES OF A SINGLE ISSUER The Trustees are recommending that the fund's fundamental investment restriction with respect to investments in the voting securities of a single issuer be revised to reflect the standard restriction used by other Putnam funds and to grant the fund the maximum flexibility permitted under the 1940 Act. The 1940 Act prohibits a diversified fund such as the fund from investing, with respect to 75% of its total assets, in the securities of an issuer if as a result it would own more than 10% of the outstanding voting securities of that issuer. The fund's current investment restriction, which is more restrictive than the 1940 Act, states that the fund may not: "Acquire more than 10% of the voting securities of any issuer." The proposed amended fundamental investment restriction is set forth below. "The fund may not ... With respect to 75% of its total assets, acquire more than 10% of the outstanding voting securities of any issuer." The amendment enables the fund to purchase more than 10% of the voting securities of an issuer with respect to 25% of the fund's total assets. Since the fund invests primarily in fixed-income securities, which are not typically voting securities, this proposal will have little practical effect on the fund. Nevertheless, Putnam Management believes it would be in the best interest of the fund to conform the policy to provide the fund with maximum flexibility should circumstances change. To the extent the fund individually or with other funds and accounts managed by Putnam Management or its affiliates were to own all or a major portion of the outstanding voting securities of a particular issuer, under adverse market or economic conditions or in the event of adverse changes in the financial condition of the issuer the fund could find it more difficult to sell these voting securities when Putnam Management believes it advisable to do so, or may be able to sell the securities only at prices significantly lower than if they were more widely held. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 3.C. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO MAKING LOANS The Trustees are recommending that the fund's fundamental investment restriction with respect to making loans be revised to reflect the standard restriction expected to be used by other Putnam funds and to clarify that the fund is permitted to participate in a proposed "interfund lending program." The current restriction states that the fund may not: "Make loans, except by purchase of debt obligations in which the Fund may invest consistent with its investment policies, by entering into repurchase agreements with respect to not more than 25% of its total assets (taken at current value), or through the lending of its portfolio securities with respect to not more than 25% of its total assets." The proposed amended fundamental investment restriction is set forth below. "The fund may not ... Make loans, except by purchase of debt obligations in which the fund may invest consistent with its investment policies (including without limitation debt obligations issued by other Putnam funds), by entering into repurchase agreements, or by lending its portfolio securities." If the proposal is approved, your fund would be able to participate in an interfund lending program that would allow the fund, through a master loan agreement, from time to time to lend available cash to other Putnam funds to meet such funds' temporary or emergency borrowing needs. By the terms of the program, a borrowing fund would be obligated to repay a lending fund. As such, the lending fund could be viewed in such a circumstance as effectively "purchasing" a debt obligation of such a borrowing fund. The fund would only make loans under the program if it could receive an interest rate higher than those available for repurchase agreements. There is a risk that the fund could experience a delay in obtaining prompt repayment of a loan and, unlike repurchase agreements, the fund would not necessarily have received collateral for its loan. A delay in obtaining prompt payment could cause the fund to miss an investment opportunity or to incur costs to borrow money to replace the delayed payment. Since the Putnam funds may be considered affiliated parties, interfund lending may be prohibited by the 1940 Act and would be implemented only upon receipt of an exemptive order of the Securities and Exchange Commission. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 3.D. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN COMMODITIES The Trustees are recommending that the fund's fundamental investment restriction with respect to investments in commodities be revised to reflect the standard restriction used by other Putnam funds. The current restriction states that the fund may not: "Purchase or sell commodities or commodity contracts, except that it may purchase or sell financial futures contracts and related options, and futures, forward contracts and options on foreign currencies" The proposed amended fundamental restriction is set forth below: "The fund may not ... Purchase or sell commodities or commodity contracts, except that the fund may purchase and sell financial futures contracts and options and may enter into foreign exchange contracts and other financial transactions not involving physical commodities." Under the revised restriction, the fund will continue to be able to engage in a variety of transactions involving the use of financial futures and options, as well as various other financial transactions to the extent consistent with its investment objective and policies. Although the fund may already engage in many of these activities, Putnam Management believes that the revised language more clearly sets forth the fund's policy. The addition of financial transactions not involving physical commodities is intended to give the fund maximum flexibility to invest in a variety of financial instruments that could technically be considered commodities, but which do not involve the direct purchase or sale of physical commodities, which is the intended focus of the restriction. Foreign exchange transactions are subject to many of the risks associated with futures and options. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 3.E. AMENDING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN REAL ESTATE The Trustees are recommending that the fund's fundamental investment restriction with respect to investments in real estate be revised to reflect the standard restriction used by other Putnam funds and to grant the fund greater flexibility. The current restriction states that the fund may not: "Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate and securities representing interests in real estate." The proposed amended fundamental investment restriction is set forth below. "The fund may not ... Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate, and securities which represent interests in real estate, and it may acquire and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of debt obligations secured by real estate or interests therein." If the proposal is approved, the fund would be able to own real estate directly as a result of the exercise of its rights in connection with debt obligations it owns. In such cases, the ability to acquire and dispose of real estate may serve to protect the fund during times where an issuer of debt securities is unable to meet its obligations. Putnam Management believes that this enhanced flexibility could assist the fund in achieving its investment objective. To the extent the fund holds real estate-related securities, it will be subject to the risks associated with the real estate market. These risks may include declines in the value of real estate, changes in general or local economic conditions, overbuilding, difficulty in completing construction, increased competition, changes in zoning laws, increases in property taxes and operating expenses, and variations in rental income. Generally, increases in interest rates will increase the costs of obtaining financing, which may result in a decrease in the value of such investments. In addition, in order to enforce its rights in the event of a default of an issuer of these securities, the fund may be required to participate in various legal proceedings or take possession of and manage assets securing the issuer's obligations. This could increase the fund's operating expenses and adversely affect the fund's net asset value. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 4.A. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN SECURITIES OF ISSUERS IN WHICH MANAGEMENT OF THE FUND OR PUTNAM INVESTMENT MANAGEMENT, INC. OWNS SECURITIES The Trustees are recommending eliminating the fund's fundamental investment restriction which prevents the fund from investing in the securities of issuers in which management of the fund or Putnam Management owns a certain percentage of securities. The restriction states that the fund may not: "Invest in securities of any issuer, if, to the knowledge of the Fund, officers and Trustees of the Fund and officers and directors of Putnam who beneficially own more than 0.5% of the securities of that issuer together own more than 5% of such securities." The fund originally adopted this restriction to comply with state securities law requirements which are no longer applicable to the fund. Since the 1940 Act does not require the fund to have such a restriction, Putnam Management recommended that this restriction be eliminated. If this proposal is approved, the fund may invest in the securities of any issuer without regard to ownership in such issuer by management of the fund or Putnam Management, except to the extent prohibited by the fund's investment policies or the 1940 Act. Putnam Management believes that this enhanced flexibility could assist the fund in meeting its investment objective. Putnam Management does not believe that eliminating this restriction involves any material risk to shareholders. Any potential conflicts of interest would be addressed by codes of ethics which are applicable to the Trustees and officers of the fund and officers and directors of Putnam Management. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 4.B. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO MARGIN TRANSACTIONS The Trustees are recommending that the fund's fundamental investment restriction with respect to margin transactions be eliminated. "Margin transactions" involve the purchase of securities with money borrowed from a broker, with cash or eligible securities being used as collateral against the loan. The current restriction states that the fund may not: "Purchase securities on margin, except such short term credits as may be necessary for the clearance of purchases and sales of securities, and except that it may make margin payments in connection with transactions in futures contracts and options." The fund originally adopted this restriction to comply with state securities law requirements which are no longer applicable to the fund. Since the 1940 Act does not require the fund to have such a restriction, Putnam Management recommended that this restriction be eliminated. If this proposal is approved, the fund would have no formal restriction with respect to engaging in margin transactions. However, the fund's potential use of margin transactions beyond transactions in financial futures and options and for the clearance of purchases and sales of securities, including the use of margin in ordinary securities transactions, is currently limited by SEC guidelines which prohibit margin transactions because they create senior securities. The fund's ability to engage in margin transactions is also limited by its investment policies, which generally permit the fund to borrow money only in limited circumstances. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 4.C. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO SHORT SALES The Trustees are recommending that the fund's fundamental investment restriction with respect to short sales be eliminated. The current restriction states that the fund may not: "Make short sales of securities or maintain a short position for the account of the Fund unless at all times when a short position is open it owns an equal amount of such securities or owns securities which, without payment of any further consideration, are convertible into or exchangeable for securities of the same issue as, and in equal amount to, the securities sold short." The fund originally adopted this restriction to comply with state securities law requirements which are no longer applicable to the fund. Since the 1940 Act does not require the fund to have such a restriction, Putnam Management recommended that this restriction be eliminated. If this proposal is approved, the fund would be able to engage in short sales other than those "against the box" (in which the fund owns or has the right to acquire at no added cost securities identical to those sold short). However, Putnam Management does not currently intend to engage in short sales on behalf of the fund. In a typical short sale, the fund would borrow securities from a broker that it anticipates will decline in value in order to sell to a third party. The fund becomes obligated to return securities of the same issue and quantity at some future date, and it realizes a loss to the extent the securities increase in value and a profit to the extent the securities decline in value (after including any associated costs). Since the value of a particular security can increase without limit, the fund could potentially realize losses with respect to short sales which are not "against the box" that are significantly greater than the value of the securities at the time they are sold short. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 4.D. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO PLEDGING ASSETS The Trustees are recommending that the fund's fundamental investment restriction which limits the fund's ability to pledge its assets be eliminated. The current restriction states that the fund may not: "Pledge, hypothecate, mortgage or otherwise encumber its assets in excess of 15% of its total assets (taken at current value) and then only to secure borrowings permitted by restriction 1 above. Collateral arrangements with respect to margin for futures contracts and options are not deemed to be pledges or other encumbrances for purposes of this restriction." [Restriction 1 allows the fund to borrow money in amounts of up to 15% of the value of its total assets for temporary or emergency purposes.] The fund originally adopted this restriction to comply with state securities law requirements which are no longer applicable to the fund. Since the 1940 Act does not require the fund to have such a restriction, Putnam Management recommended that this restriction be eliminated. This proposal would remove all restrictions on the fund's ability to pledge assets. Putnam Management recommended the proposal to the Trustees because it believes that the fund's current limits on pledging may conflict with the fund's ability to borrow money for temporary or emergency purposes. This conflict arises because lenders may require borrowers such as the fund to pledge assets in order to collateralize the amount borrowed. Often, these collateral requirements are for amounts larger than the principal amount of the loan. If the fund needed to borrow the maximum amount permitted by it policies (currently 15% of its total assets), it might be possible that a bank would require collateral in excess of 15% of the fund's total assets. Therefore, the limit on pledging assets may have the effect of reducing the amount that the fund may borrow in these situations. Pledging assets does entail certain risks. To the extent that the fund pledges its assets, the fund may have less flexibility in liquidating its assets. If a large portion of the fund's assets were involved, the fund's ability to meet other obligations could be delayed. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 4.E. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN RESTRICTED SECURITIES The Trustees are recommending that the fund's fundamental investment restriction which limits the fund's investments in securities subject to restrictions on resale, which are known as "restricted securities," be eliminated. The current fundamental investment restriction states that the fund may not: "Purchase securities restricted as to resale if, as a result, such investments would exceed 15% of the value of the Fund's net assets, excluding restricted securities that have been determined by the Trustees of the Fund (or the person designated by them to make such determinations) to be readily marketable." Putnam Management recommended that this restriction be eliminated because it is unnecessary in light of current regulatory requirements; the 1940 Act does not require the fund to have such a restriction. To the extent the fund invests in restricted securities, the fund may encounter difficulty in determining the fair value of such securities. The fund also may be unable to sell such securities at a time when it may otherwise be desirable to do so or may have to sell them at less than fair market value. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 4.F. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTMENTS IN OIL, GAS AND MINERAL INTERESTS The Trustees are recommending that the fund's fundamental investment restriction relating to investments in oil, gas and mineral interests be eliminated. The current restriction states that the fund may not: "Buy or sell oil, gas, or other mineral leases, rights or royalty contracts, although it may purchase securities of issuers which deal in, represent interests in or are secured by interests in such leases, rights or contracts." The fund originally adopted this restriction to comply with state securities law requirements which are no longer applicable to the fund. Since the 1940 Act does not require the fund to have such a restriction, Putnam Management recommended that this restriction be eliminated. If this proposal is approved, the fund would be able to invest directly in oil, gas and mineral interests, and in a variety of securities the value of which is dependent upon the value of such interests. Since the fund invests primarily in fixed-income securities, this proposal will have little practical effect on the fund. However, to the extent the fund makes investments in oil, gas and other mineral leases, rights or royalty contracts, and in securities which derive their value in part from such instruments, the fund will be exposed to certain risks. The prices of these investments are subject to substantial fluctuations, and may be affected by unpredictable economic and political circumstances such as social, political, or military disturbances, the taxation and regulatory policies of various governments, the activities and policies of OPEC (an organization of major oil producing countries), the existence of cartels in such industries, the discovery of new reserves and the development of new techniques for producing, refining and transporting such materials and related products, the development of new technology, energy conservation practices, and the development of alternative energy sources and alternative uses for such materials and related products. In addition, in order to enforce its rights in the event of a default of an issuer of these securities, the fund may be required to participate in various legal proceedings or take possession of and manage assets securing the issuer's obligations. This could increase the fund's operating expenses and adversely affect the yield on its shares. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. 4.G. ELIMINATING THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO INVESTING TO GAIN CONTROL OF A COMPANY'S MANAGEMENT The Trustees are recommending that the fund's fundamental investment restriction which states that the fund may not "[m]ake investments for the purpose of gaining control of a company's management" be eliminated. Eliminating the restriction would make it clear that the fund can freely exercise its rights as a shareholder of the various companies in which it may invest, which activities could at times fall under the technical definition of control under the securities laws. These rights may include the right to actively oppose or support the management of such companies. Since the fund invests primarily in fixed-income securities, this proposal will not impact the majority of the fund's investments. Nevertheless, Putnam Management believes it would be in the best interest of the fund to eliminate the restriction. REQUIRED VOTE. Approval of this proposal requires the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the fund, or (2) 67% or more of the shares of the fund present at the meeting if more than 50% of the outstanding shares of the fund are present at the meeting in person or by proxy. FURTHER INFORMATION ABOUT VOTING AND THE MEETING QUORUM AND METHODS OF TABULATION. A majority of the shares entitled to vote -- present in person or represented by proxy -- constitutes a quorum for the transaction of business with respect to any proposal at the meeting (unless otherwise noted in the proxy statement). Shares represented by proxies that reflect abstentions and "broker non-votes" (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) will be counted as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum. Votes cast by proxy or in person at the meeting will be counted by persons appointed by your fund as tellers for the meeting. The tellers will count the total number of votes cast "for" approval of the proposals for purposes of determining whether sufficient affirmative votes have been cast. With respect to the election of Trustees and selection of auditors, neither abstentions nor broker non-votes have any effect on the outcome of the proposal. With respect to any other proposals, abstentions and broker non-votes have the effect of a negative vote on the proposal. OTHER BUSINESS. The Trustees know of no other business to be brought before the meeting. However, if any other matters properly come before the meeting, it is their intention that proxies that do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named as proxies in the enclosed form of proxy. SIMULTANEOUS MEETINGS. The meeting of shareholders of your fund is called to be held at the same time as the meetings of shareholders of certain of the other Putnam funds. It is anticipated that all meetings will be held simultaneously. If any shareholder at the meeting objects to the holding of a simultaneous meeting and moves for an adjournment of the meeting to a time promptly after the simultaneous meetings, the persons named as proxies will vote in favor of such adjournment. SOLICITATION OF PROXIES. In addition to soliciting proxies by mail, Trustees of your fund and employees of Putnam Management, Putnam Fiduciary Trust Company, and Putnam Mutual Funds may solicit proxies in person or by telephone. Your fund may also arrange to have voting instructions recorded by telephone. The telephone procedure is designed to authenticate shareholders' identities, to allow shareholders to authorize the voting of their shares in accordance with their instructions and to confirm that their instructions have been properly recorded. Your fund has been advised by counsel that these procedures are consistent with the requirements of applicable law. If these procedures were subject to a successful legal challenge, such votes would not be counted at the meeting. Your fund is unaware of any such challenge at this time. Shareholders would be called at the phone number Putnam Investments has in its records for their accounts, and would be asked for their Social Security number or other identifying information. The shareholders would then be given an opportunity to authorize proxies to vote their shares at the meeting in accordance with their instructions. To ensure that the shareholders' instructions have been recorded correctly, they will also receive a confirmation of their instructions in the mail. A special toll-free number will be available in case the information contained in the confirmation is incorrect. Your fund's Trustees have adopted a general policy of maintaining confidentiality in the voting of proxies. Consistent with this policy, your fund may solicit proxies from shareholders who have not voted their shares or who have abstained from voting. Persons holding shares as nominees will upon request be reimbursed for their reasonable expenses in soliciting instructions from their principals. Your fund has retained at its expense D. F. King & Co., Inc., 77 Water Street, New York, New York 10005 , to aid in the solicitation of instructions for registered and nominee accounts, for a fee not to exceed $5,500 plus reasonable out-of-pocket expenses for mailing and phone costs. REVOCATION OF PROXIES. Proxies, including proxies given by telephone, may be revoked at any time before they are voted by a written revocation received by the Clerk of your fund, by properly executing a later-dated proxy or by attending the meeting and voting in person. DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR THE NEXT ANNUAL MEETING. It is currently anticipated that your fund's next annual meeting of shareholders will be held in June 2000. Shareholder proposals to be included in the proxy statement for that meeting must be received by your fund before November 14, 1999. Shareholders who wish to make a proposal at the 2000 annual meeting-other than one that will be included in the fund's proxy materials-should notify the fund no later than January 28, 2000. If a shareholder who wishes to present a proposal fails to notify the fund by this date, the proxies solicited for the meeting will have discretionary authority to vote on the shareholder's proposal if it is properly brought before the meeting. If a shareholder makes a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the SEC's proxy rules. ADJOURNMENT. If sufficient votes in favor of any of the proposals set forth in the Notice of Meeting are not received by the time scheduled for the meeting, the persons named as proxies may propose adjournments of the meeting for a period or periods of not more than 60 days in the aggregate to permit further solicitation of proxies with respect to those proposals. Any adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the meeting to be adjourned. The persons named as proxies will vote in favor of adjournment those proxies that they are entitled to vote in favor of such proposals. They will vote against adjournment those proxies required to be voted against such proposals. Your fund pays the costs of any additional solicitation and of any adjourned session. Any proposals for which sufficient favorable votes have been received by the time of the meeting may be acted upon and considered final regardless of whether the meeting is adjourned to permit additional solicitation with respect to any other proposal. FINANCIAL INFORMATION. YOUR FUND WILL FURNISH TO YOU UPON REQUEST, WITHOUT CHARGE, A COPY OF THE FUND'S ANNUAL REPORT FOR ITS MOST RECENT FISCAL YEAR, AND A COPY OF ITS SEMIANNUAL REPORT FOR ANY SUBSEQUENT SEMIANNUAL PERIOD. SUCH REQUESTS MAY BE DIRECTED TO PUTNAM INVESTOR SERVICES, P.O. BOX 41203, PROVIDENCE, RI 02940-1203 OR 1-800-225-1581. FUND INFORMATION LIMITATION OF TRUSTEE LIABILITY. The Agreement and Declaration of Trust of your fund provides that the fund will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the fund, except if it is determined in the manner specified in the Agreement and Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the fund or that such indemnification would relieve any officer or Trustee of any liability to the fund or its shareholders arising by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. Your fund, at its expense, provides liability insurance for the benefit of its Trustees and officers. AUDIT AND PRICING AND BOARD POLICY COMMITTEES. The voting members of the Audit and Pricing Committee of your fund include only Trustees who are not "interested persons" of the fund by reason of any affiliation with Putnam Investments and its affiliates. The Audit and Pricing Committee currently consists of Messrs. Estin, Joskow, Putnam, III (Chairman and without vote), Smith (without vote), Stephens and Ms. Kennan. The Board Policy Committee consists only of Trustees who are not "interested persons" of your fund or Putnam Management. The Board Policy Committee currently consists of Ms. Kennan (Chairperson), Messrs. Hill, Patterson, Pounds and Thorndike. OFFICERS AND OTHER INFORMATION. In addition to George Putnam and Lawrence J. Lasser, the officers of your fund are as follows: YEAR FIRST ELECTED TO NAME (AGE) OFFICE OFFICE - ----------------------------------------------------------------- Charles E. Porter (60) Executive Vice President 1989 Patricia C. Flaherty (52) Senior Vice President 1993 John D. Hughes (64) Senior Vice President & Treasurer 1988 Gordon H. Silver (51) Vice President 1990 Ian C. Ferguson (41) Vice President 1997 Brett C. Browchuk (36) Vice President 1998 Stephen Oristaglio (43) Vice President 1998 Edward H. D'Alelio (46) Vice President 1998 Jennifer E. Leichter* (38) Vice President 1990 David Waldman* (32) Vice President 1998 D. William Kohli* (38) Vice President 1994 Richard A. Monaghan**(44) Vice President 1998 John R. Verani (59) Vice President 1988 Beverly Marcus (54) Clerk 1988 - ----------------------------------------------------------------- * One of the fund's portfolio managers ** President of Putnam Mutual Funds All of the officers of your fund are employees of Putnam Management or its affiliates. Because of their positions with Putnam Management or its affiliates or their ownership of stock of Marsh & McLennan Companies, Inc., Messrs. Putnam, Putnam, III, Lasser and Smith (nominees for Trustees of your fund), as well as the officers of your fund, will benefit from the management fees, custodian fees, and investor servicing fees paid or allowed by the fund. ASSETS AND SHARES OUTSTANDING OF YOUR FUND AS OF FEBRUARY 26, 1999 NET ASSETS: $791,744,375 SHARES OUTSTANDING AND AUTHORIZED TO VOTE: 100,095,474 shares 5% BENEFICIAL OWNERSHIP OF YOUR FUND AS OF FEBRUARY 26, 1999: Persons beneficially owning more than 5% of the fund's shares None PUTNAMINVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 Toll-free 1-800-225-1581 50574 3/99 DEAR SHAREHOLDER: Your vote is important. Please help us to eliminate the expense of follow - up mailings by signing and returning this proxy as soon as possible. A postage - paid envelope is enclosed for your convenience. THANK YOU! HAS YOUR ADDRESS CHANGED? Please use this form to notify us of any change in address or telephone number or to provide us with your comments. Detach this form from the proxy ballot and return it with your signed proxy in the enclosed envelope. Street - ----------------------------------------------------------------- City State Zip - ----------------------------------------------------------------- Telephone - ----------------------------------------------------------------- DO YOU HAVE ANY COMMENTS? - ----------------------------------------------------------------- - ----------------------------------------------------------------- - ----------------------------------------------------------------- PUTNAMINVESTMENTS LOGO THIS IS YOUR PROXY CARD. PLEASE VOTE THIS PROXY, SIGN IT BELOW, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. YOUR VOTE IS IMPORTANT. Proxy for a meeting of shareholders to be held on June 3, 1999 for PUTNAM MASTER INTERMEDIATE INCOME TRUST. THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE FUND. The undersigned shareholder hereby appoints George Putnam, Hans H. Estin, and Robert E. Patterson, and each of them separately, Proxies, with power of substitution, and hereby authorizes them to represent and to vote, as designated below, at the meeting of shareholders of Putnam Master Intermediate Income Trust onJune 3, 1999, at 2:00 p.m., Boston time, and at any adjournments thereof, all of the shares of the fund that the undersigned shareholder would be entitled to vote if personally present. PLEASE BE SURE TO SIGN AND DATE THIS PROXY. Please sign your name exactly as it appears on this card. If you are a joint owner, each owner should sign. When signing as executor, administrator, attorney, trustee, or guardian, or as custodian for a minor, please give your full title as such. If you are signing for a corporation, please sign the full corporate name and indicate the signer's office. If you are a partner, sign in the partnership name. - ----------------------------------------------------------------- Shareholder sign here Date - ----------------------------------------------------------------- Co - owner sign here Date IF YOU COMPLETE AND SIGN THE PROXY, WE'LL VOTE IT EXACTLY AS YOU TELL US. IF YOU SIMPLY SIGN THE PROXY, IT WILL BE VOTED FOR FIXING THE NUMBER OF TRUSTEES AND ELECTING TRUSTEES AS SET FORTH IN PROPOSAL 1 AND FOR EACH OF THE OTHER PROPOSALS. IN THEIR DISCRETION, THE PROXIES WILL ALSO BE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES RECOMMEND A VOTE FOR FIXING THE NUMBER OF TRUSTEES AND ELECTING ALL OF THE NOMINEES FOR TRUSTEES AND FOR THE OTHER PROPOSALS LISTED BELOW: PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW. PROPOSAL TO: 1. FIX THE NUMBER OF AND ELECT TRUSTEES. The nominees for Trustees are: J.A. Baxter, H.H. Estin, J.A. Hill, R.J. Jackson, P.L. Joskow, E.T. Kennan, L.J. Lasser, J.H. Mullin, R.E. Patterson, W.F. Pounds, G. Putnam, G. Putnam, III, A.J.C. Smith, W.T. Stephens and W.N. Thorndike. / / FOR fixing the number of Trustees and electing all the nominees (EXCEPT AS MARKED TO THE CONTRARY BELOW.) TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE NOMINEES, WRITE THE NAMES OF THE NOMINEE(S) NAMES BELOW: ------------------------------------------------------------ / / WITHHOLD authority to vote for all nominees 2. RATIFY FOR AGAINST ABSTAIN THE SELECTION OF / / / / / / PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT AUDITORS OF YOUR FUND. 3. AMEND THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO: 3.A. DIVERSIFICATION. / / / / / / 3.B. INVESTMENTS IN THE VOTING / / / / / / SECURITIES OF A SINGLE ISSUER. 3.C. MAKING LOANS. / / / / / / 3.D. INVESTMENTS IN / / / / / / COMMODITIES. 3.E. INVESTMENTS IN / / / / / / REAL ESTATE. 4. ELIMINATE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH RESPECT TO: 4.A. INVESTMENTS IN SECURITIES / / / / / / OF ISSUERS IN WHICH MANAGEMENT OF THE FUND OR PUTNAM INVESTMENT MANAGEMENT, INC. OWNS SECURITIES. 4.B. MARGIN TRANSACTIONS. / / / / / / 4.C. SHORT SALES. / / / / / / 4.D. PLEDGING ASSETS. / / / / / / 4.E. INVESTMENTS IN RESTRICTED / / / / / / SECURITIES. 4.F. INVESTMENTS IN OIL, / / / / / / GAS AND MINERAL INTERESTS. 4.G. INVESTING TO GAIN CONTROL / / / / / / OF A COMPANY'S MANAGEMENT. NOTE: If you have questions on any of the Proposals , please call 1-800-225-1581.
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